Washed up: ASIC and ACCC set sights on unsupported AI claims

Have you ever had the feeling that the products and services you pay for aren’t as ‘eco-friendly’ as they’re made out to be? Well, you may have been right. For the past few decades there has been a stable uptick in products and services marketed with words or abbreviations such as “Eco“, “Bio”, “Sustainable”, and “Enviro“, colours (like green or blue), and imagery (e.g. leaves or plants) with approximately The only trouble is, some of the same businesses using these markers don’t actually have the “green” practices to back up their “green” representations and are merely adopting the strategy to keep pace with market pressure to move in a sustainable direction. This is known as ‘greenwashing’ – the practice of misrepresenting the extent to which a product or service is environmentally or climate friendly, sustainable, or ethical.

Not so green

Regulatory bodies like ASIC and the ACCC have been heavily investigating this type of practice for the past few years. The ACCC most recently slapped Clorox with an $8.25 million fine in April of 2025 for misrepresenting that its GLAD garbage and kitchen tidy bags were “50% Ocean Plastic Recycled”. Interestingly, the bags were actually made from 50% recycled plastic, but the plastic didn’t come from the ocean – instead, it was collected from communities with no formal waste management systems located up to 50km from shore.

In the case against Clorox, the court discussed some of the impacts that greenwashing practices can have on consumers and competition in the market, such that “…a particular societal harm arises when conduct undermines consumers’ confidence in environmental claims. Many consumers care about their environmental impact and environmental claims are often key factors for consumers in deciding how to spend their money”.[1] The court also noted that “[m]aking representations about the environmental benefits of the Products … is a matter of particular seriousness where, as in this case, consumers have limited or no access to information to test the accuracy of such claims”.[2]

ASIC: “ChatGPT, what is AI washing?”

ASIC appears to be the first regulatory body to recalibrate and focus its efforts on ‘AI washing’. AI washing is the practice of companies exaggerating or falsely claiming the use of AI in their products, services, or operations to make the company appear more innovative or technologically advanced than it actually is. Much the same as with greenwashing, companies have begun deploying hot words like “smart”, “machine learning”, or “deep learning”, in circumstances where the products or services only use basic algorithms, or indeed, none at all.

It’s little wonder that AI washing has captured ASIC’s attention, with some in the field suggesting that startups that compared to those that don’t use or mention AI.

One of ASIC’s key objectives is to deter companies from misleading clients, investors, and potential investors, and there is little room to doubt that other regulatory bodies will soon join the party, including IP Australia, the ACCC, Ad Standards Australia, and others.

Consequences of AI washing

A company may expose itself to the risk of AI washing, even in circumstances where it does actually implement AI technology. This is because, as compared to green washing, it can be even harder for the average consumer to verify whether AI claims made by a company are actually true, whether in whole or in part. For example, if we follow the Clorox case, a company may be found to breach consumer protection laws if it adds non-essential AI features to traditional products to make them appear as ‘cutting-edge tech’.

For businesses, breaches of consumer protection laws could mean coughing up some seriously hefty and avoidable fines, being the greater of:

• $50,000,000,
• 3x the benefit reasonably attributable to the breach, or
• 30 per cent of adjusted turnover during the relevant period of the breach.

Our recommendation

To be plain and simple, and following , if you don’t use AI tools, don’t say that you do.  Naturally, we expect more guidance to be provided by regulatory bodies in relation to AI washing practices overtime, especially in anticipation of potential upcoming legislative changes. But for now, we think it is good thinking to rely on the principles issued by the ACCC in its green washing guide of December of 2023. The guide states that companies should:

• make accurate and truthful claims;
• have evidence to back up these claims;
• not hide or omit important information;
• explain any conditions or qualifications that effect the claims;
• avoid broad and unqualified claims;
• use clear and easy to understand language;
• ensure visual elements should not give the wrong impression;
• be direct and open about any [Artificial Intelligence] transition.

Notwithstanding that there are already early indications of interest from regulatory bodies, AI washing will soon become its own beast, and navigating a balance between effective marketing and legal compliance will require tailored advice specific to your situation. If you need help with navigating the complexities of trade mark law, ACCC and ASIC compliance, abiding by Ad Standards Codes, or want to build or renew a robust and resilient AI policy – Macpherson Kelley’s IP, Trade & Technology team is ready to assist.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.

[1] ACCC v Clorox Australia Pty Limited [2025] FCA 357, [78].

[2] Ibid [76].

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.